Gates world’s richest again as Microsoft fights back

Leading the way. Bill Gates has less involvement in the running of Microsoft these days, but the strong financial performance of the company has helped him top the list of the world’s richest.
Photo: Reuters

Software entrepreneur
Bill Gates
has reclaimed his title as the world’s richest person, a sign of how Microsoft, the company he founded and which was recently considered a dinosaur of the technology world, is staging an unlikely comeback.

Microsoft’s share price hit a five-year high on Thursday despite a common impression that it is on a downward spiral resulting from the successes of competitors such as Google and Apple.

The billionaire philanthropist, who will visit Australia this month, replaced Mexican telecommunications titan Carlos Slim at the top of a continually updated list of the world’s billionaires compiled by financial news service Bloomberg.

With his wealth hitting $US72.7 billion, Mr Gates holds the top spot on the rankings for the first time since 2007.

Mr Slim is worth $US72.1 billion and Warren Buffett is third with $US59.7 billion. Australia’s richest person, Gina Rinehart, is 41th on the list with a net worth of $US17.1 billion.

Mr Gates’s wealth does not stem solely from his holding in Microsoft, but the fact the company’s stock has risen 28 per cent this year helped his bounce to the top of the list.

Analysts remain divided on the reasons for Microsoft’s strong performance, which has come despite seemingly muted demand for its much-hyped new Windows 8 operating system and limited presence in the increasingly lucrative smartphone and tablet markets.

As Google has begun to encroach on Microsoft’s Office software products and the success of tablets hurts PC sales, Microsoft has reported success in other areas.

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Xbox consoles have sold well and its Kinect Sensor System to track gamers’ body movements was the fastest-selling consumer electronic device in history.

In the corporate realm it is a foray into Cloud Computing, with its Office 365 product, which is poised to be make or break for the company’s growth.

The product gives people access to Microsoft products via the internet rather than having applications installed on individual computers.

IBRS analyst Joe Sweeney warned that the shares’ strong performance could be unsustainable.

Microsoft has attempted to portray Windows 8 as a big success, having sold 100 million copies, but Mr Sweeney said much of this could be down to businesses undergoing regular upgrades for contractual reasons.

He said the trend for consumer devices to be increasingly used for work would be a longer-term threat to Microsoft’s prospects.

“In short, Microsoft is doing a better job of managing and monetising their existing business customer relationships. This is a winning strategy at the moment, but faces threats," he said.

“Microsoft’s ability to extract additional value from clients via its licensing model may become its Achilles heel as consumerisation of IT really begins to bite.

“With the exception of the Xbox, it has not been able to demonstrate any compelling successes in the area of consumerised technology."